The Financial Reporting Council (FRC) has launched a consultation on revisions to the Ethical Standard. The proposed revisions enhance prohibitions where an audit firm's independence could be threatened. There are also changes proposed to reflect findings from audit inspections and enforcement cases, as well as changes to reflect developments in the International Ethics Standards Board for Accountants (IESBA) since the FRC last revised the standard in 2019. The consultation remains open until 31 October 2023.

The International Auditing and Assurance Standards Board (IAASB) has issued its proposed International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. This proposed standard will now undergo a consultation period running until 1 December 2023 and stakeholders are encouraged to respond and share their feedback to the proposed standard. ISSA 5000 is a principles-based, overarching standard suitable for both limited and reasonable assurance engagements on sustainability information reported across any sustainability topic. It is intended to work with various sustainability reporting frameworks (including the European Sustainability Reporting Standards and the IFRS Sustainability Disclosure Standards). The standard is drafted as a profession agnostic standard and should be suitable for use by accountant and non-accountant assurance practitioners. With the sustainability reporting requirements for certain entities set to increase over the coming years, a standalone sustainability standard is seen as a key piece of the framework to help ensure that users of sustainability information can place greater trust in the information they are consuming on an entities Environmental, Social and Governance impacts. In launching the consultation, IAASB Chair Tom Seidenstein commented “Our proposed ISSA 5000 is a crucial step in enhancing confidence and trust in sustainability reporting. This proposal directly responds to the International Organization of Securities Commissions recommendations and complements the work of other standard setters, including the International Ethics Standards Board for Accountants,”. The comment period remains open until 1 December and the IAASB are seeking a broad range of views on the standard to gather the views and insights needed to finalise it.

The latest, 11th EU sanctions package was implemented on 23 June 2023. Click here and here for the press releases from the EU Council. The package introduces further trade, transport and energy restrictions. It also lists  over 100 additional individuals and entities subject to asset freezes and other restrictions  such as extension of the media ban to 5 additional channels. Click here for a summary of the key elements. Click here to go to the European Commission website where readers can find further information on the eleventh package including Q&A on the package. The European Union External Action webpage has a booklet on their website summarising the provisions of the eleventh package which you can access here. This information is provided as resources and information only and nothing in these pages purports to provide professional advice or definitive legal interpretation(s) or opinion(s) on the applicable legislation or legal or other matters referred to in the pages. If the reader is in doubt on any matter in this complex area further legal or other advice must be obtained. While every reasonable care has been taken by the Institute in the preparation of these pages, we do not guarantee the accuracy or veracity of any resource, guidance, information or opinion, or the appropriateness, suitability or applicability of any practice or procedure contained therein. The Institute is not responsible for any errors or omissions or for the results obtained from the use of the resources or information contained in these pages.  

Following its recent consultation on the proposed amendments to FRS 101 and FRS 102 relating to the OECD's Pillar Two model rules, the FRC has now issued amendments to FRS 101 and FRS 102. The amendments introduce a temporary exception to accounting for deferred taxes arising from the implementation of the Pillar Two model rules, alongside targeted disclosure requirements. The temporary exception is effective immediately and the disclosure requirements are effective for accounting periods beginning on or after 1 January 2023, with early application permitted. A small number of FRS 102 preparers are likely to be impacted by the Pillar Two model rules and the changes are based on a similar amendment to IAS 12 issued in May by the International Accounting Standards Board.

In developments this week, the Financial Reporting Council (FRC) has published a research report about Audit Committee Chairs’ views on, and approach to, Environmental, Social and Corporate Governance (ESG) activities and reporting; the European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published its Annual Report for 2022. Read more on these and other developments that may be of interest to members below. Assurance and Audit Technical Release 01/2023 Safeguarding reporting for payment and electronic money firms has been issued. The purpose of this Technical Release (TR) is to provide assistance to auditors who are engaged by Payment and Electronic Money (E-Money) institutions (the Firms) following a request from the Central Bank of Ireland to carry out an engagement pursuant to a letter to the Firms dated 20 January 2023 and a further communication on 25 May 2023. The Financial Reporting Council (FRC) has published a research report about Audit Committee Chairs’ views on, and approach to, Environmental, Social and Corporate Governance (ESG) activities and reporting.  The report, commissioned by the FRC and conducted by independent research agency YouGov, involved qualitative interviews with 40 ACCs of Public Interest Entities (PIEs), representing a diverse range of organisations, including FTSE 100 and FTSE 250 companies, other listed equities, building societies, and unlisted banks.  The FRC has published a response to the consultation on proposed amendments to the Audit Enforcement Procedure (AEP) and related guidance launched on 3 April 2023. The main purpose of the proposals was to effect changes to the decision-making remit of the Board and the Case Examiner under Part 2 of the AEP (Initial Stages). Financial Reporting The Financial Reporting Council (FRC) has updated its guidance to Actuarial Standard Technical Memorandum 1 (AS TM1) version 5, which provides clarity on the application of some paragraphs within the standard. The International Accounting Standards Board (IASB) has issued the June 2023 IFRS for SMEs Accounting Standard update. This covers news, events and other developments in the standard during the month. This update includes an overview of the proposed amendments to the standard relating to the Pillar Two model rules. Insolvency For the first time in Ireland, the Court has appointed an Examiner to a foreign registered, non-EU company on the basis that its centre of main interests is in Ireland. McCann FitzGerald solicitors are acting for the Company in examinership and has summarised this precedent appointment. We have recently been engaging with the Examiner of the High Court who has noted that Judge Quinn, who manages the Examiner’s Court List, is keen to finalise a number of old liquidations in the coming months. The Examiner is seeking the engagement of Liquidators in helping to finalise these matters. In that regard, the Examiner will shortly be in contact directly with the Solicitors who act for Liquidators in these matters asking for papers to be submitted for a Final Application to the Court and your co-operation in preparing up to date Liquidator’s Reports would be greatly appreciated. Sustainability The International Sustainability Standards Board (ISSB) has announced that it will issue its sustainability standards IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures on 26 June 2023. Accountancy Europe have made available some working documents which compare the first set of European Sustainability Reporting Standards (ESRS) proposed in the recent Delegated Act to the European Financial Reporting Advisory Group’s original drafts. The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has launched a Call for Evidence (CfE) on integrating sustainability preferences into suitability assessment and product governance arrangements under the Markets in Financial Instruments Directive (MiFID) II. The objective of this Call for Evidence (CfE) is to gather industry feedback that will help better understand the evolution of the market and provide answers as to how firms apply the new MiFID rules on sustainability. The FRC has issued its response to the ISSB consultation on the methodology for enhancing the international applicability of the SASB Standards and SASB Standards Taxonomy updates. Other News Accountancy Europe has published its June 2023 SME update. The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) has this week launched a public consultation on the first batch of policy products under the Digital Operational Resilience Act (DORA). This includes four draft regulatory technical standards (RTS) and one set of draft implementing technical standards (ITS). These technical standards aim to ensure a consistent and harmonised legal framework in the areas of ICT risk management, major ICT-related incident reporting and ICT third-party risk management. The consultation runs until 11 September 2023. The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published its Annual Report for 2022. It sets out the key achievements of the authority in fulfilling its mission of enhancing investor protection and promoting stable and orderly financial markets in the European Union (EU) during a transformative year.   The European Banking Authority (EBA) has published its Report on money laundering and terrorist financing (ML/TF) risks associated with EU payment institutions. Its findings suggest that ML/TF risks in the sector may not be assessed and managed effectively by institutions and their supervisors. The Central Bank has published its second Quarterly Bulletin of 2023. For further technical information and updates please visit the Technical Hub on the Institute website.

Welcome to this week’s Technical Roundup. In developments this week, the World Economic Forum continues its work with the International Sustainability Standards Board (ISSB) by convening a group of sustainability professionals focused on sharing best practices and practicalities of adopting ISSB Standards; the Financial Conduct Authority (FCA) has issued financial promotion rules for cryptoassets and a consultation on guidance on how it approaches, and how firms comply with, FCA requirements that crypto-asset financial promotions must be fair, clear and not misleading. Read more on these and other developments that may be of interest to members below. Financial Reporting The Financial Reporting Council (FRC) has published its thematic review of fair value measurement. This publication reflects the FRC’s Corporate Reporting Review team’s experiences with IFRS 13 and has a particular focus on disclosure matters, with some measurement issues also discussed. The FRC has also published research into the impact of proxy voting advisors and ESG ratings agencies on actions and reporting by FTSE350 companies and investor voting decisions. The IFRS Interpretations committee has issued its June 2023 update which includes details of some of the requests that it has received in relation to; A merger between a parent and its subsidiary (IAS 27) Application of the ‘Own Use’ Exception (IFRS 9) Consolidation of a non-hyperinflationary subsidiary by a hyperinflationary parent (IAS 21 & IAS 29) In order to understand preparer’s views on the International Accounting Standards Board’s (IASB) upcoming Request for Information on the implementation and application of IFRS 15, the UK Endorsement Board is holding some roundtables on 20 and 21 June. Insolvency The Financial Conduct Authority is placing a ban on debt packagers receiving remuneration from debt solution providers. The ban covers any commission, fee or any other financial consideration, received by a debt packager firm, directly or indirectly, from a debt solution provider in connection with the firm referring customers to a debt solution provider, or any other related services.   Sustainability Accountancy Europe is hosting an in-person event on 5 July 2023 at their Brussels offices – CSRD: Striving for Consistent and Quality Sustainability Assurance Engagements across the EU. The European Commission launched a consultation this week seeking feedback in relation to draft delegated regulation supplementing Directive 2013/34/EU as regards sustainability reporting standards. The European Sustainability Reporting Standards (ESRS) in the draft Delegated Act include significant revisions to the draft standards recommended by the European Financial Reporting Advisory Group (EFRAG) in November 2022, which include additional phase-ins, making certain disclosures voluntary, and making all disclosure requirements (apart from a set of general disclosures) subject to materiality assessments. The consultation closes on 7 July 2023. The World Economic Forum continues its work with the International Sustainability Standards Board (ISSB) by convening a group of sustainability professionals focused on sharing best practices and practicalities of adopting ISSB Standards.   Cryptoassets The Financial Conduct Authority in the UK has some recent publications on cryptoassets It released it latest 'Research Note: Cryptoassets consumer research 2023'. The research series began in 2019 to understand the trend in UK adults’ cryptoassets holdings and changes in consumer behaviour and is continued annually to gain further insights into the potential harms and benefits of cryptoassets and understand consumers’ attitudes towards cryptoassets. The FCA says the results from this research will be used to inform its cryptoassets policy work. In the conclusion it is stated that cryptoassets remain a high-risk investment, and anyone who looks to purchase them should be aware of the risks and be prepared to lose all their money. Cryptoassets predominantly sit outside of the FCA’s current regulatory perimeter and users of cryptoassets are unlikely to be covered by financial protections such as the FSCS. In further crypto news the FCA also issued Financial promotion rules for cryptoassets and a consultation on guidance on how it approaches, and how firms comply with, FCA requirements that crypto-asset financial promotions must be fair, clear and not misleading. All cryptoasset firms marketing to UK consumers, including firms based overseas, will need to comply with the UK financial promotions regime from 8 October 2023.  The UK Government is bringing promotions of certain cryptoassets within their remit. The financial promotions regime will apply to all firms marketing cryptoassets to UK consumers regardless of whether the firm is based overseas or what technology is used to make the promotion.   Other News The CCAB-I Business Law Committee submitted a response to the Department of Enterprise, Trade and Employment public consultation on proposed amendments to Companies Act 2014. The response which is available on our website focused on responding to the areas which most impact members from a technical perspective. The Central Bank Deputy Governor spoke recently at the Banking and  Payments Federation Ireland  Retail Banking Conference 2023.The topic was ESG integration in the banking sector. The conclusion was while there is much done, there is much more to do and details of the speech can be accessed here. The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published its follow-up report to the peer review on the Guidelines on ETFs and other UCITS issues. The report shows that the National Competent Authorities (NCAs) have strengthened their supervisory practices, enhanced internal and external guidance, and performed supervisory work in the area of Exchange-traded funds (ETFs) and other Undertakings for Collective Investment in Transferable Securities (UCITS) since 2018. The Department of Enterprise, Trade and Employment invites expressions of interest from suitably qualified individuals for membership of the Enterprise Digital Advisory Forum (EDAF).  Established in May 2022, the forum plays a key role in advising and working with government to drive industry adoption digital technologies, in accordance with the National AI Strategy and the National Digital Strategy. The UK Financial Intelligence Unit has recently published its latest SARs Reporter Booklet for June 2023 . It provides case study examples highlighting the work of law enforcement agencies in utilising SAR intelligence to initiate investigations and to inform existing ones. The Irish Workplace Relations Commission has, for information purposes published a WRC Remedies Table  (last revised May 31 2023) which sets out the remedies that may be granted by a WRC Adjudication Officer in the different areas of employment and equality legislation which come under the WRC’s jurisdiction. While the WRC states that the table should not be relied upon in place of legal advice and the WRC accepts no liability for reliance on it is a useful summary table for anyone with an interest in employment law. The OECD Guidelines for Multinational Enterprises on Responsible Business Conduct are standards which multinational enterprises are expected to meet, and which OECD member countries have committed to uphold. The Guidelines are recommendations on responsible business conduct and provide non-binding principles and standards in a global context. The 2023 edition of the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct has recently been published and they can be accessed by going to this page where key updates are also summarised. For further technical information and updates please visit the Technical Hub on the Institute website.